Cement Industry Expects Concrete Strides

February 23, 1986|By New York Times News Service.

NEW YORK — The domestic cement industry, battered by the recession earlier in the decade, has been slowed in its comeback efforts by a surge in low-cost imports, industry officials say. Outpacing a reviving demand for the material in the last few years, the imports have been cited as weakening prices and depressing earnings.

Now, however, some industry experts say the situation should stabilize and perhaps improve.

The American market is looking less attractive to foreign suppliers because of the weakening dollar, and imports should level off or decline slightly in 1986, they say. However, domestic consumption, spurred by a construction boom, is expected to surpass the industry`s 1973 peak, they say.

``After three years of rapid growth of imports, this is a major change in direction,`` said Robert T. Roy, chief economist of the Portland Cement Association, the industry`s trade group. ``We`re not going to see a major improvement, but the worst is behind us.``

Just how bad the situation had become was underscored by last year`s results. U.S. consumption amounted to 83.3 million tons of portland cement, a generic term encompassing nearly all types of cement used in construction. But though that amount was exceeded only by the 1973 record of 86.2 million tons, prices did not rise accordingly.

The average price in 1984 for a ton of cement was $51.62, according to the U.S. Bureau of Mines. Figures for 1985 have not been compiled, but Carmine Muratore, executive vice president at Lone Star Industries, the nation`s largest cement producer, put the average price at $50 to $51 a ton.

``It`s not so much that prices are down but that they haven`t moved up,`` said John Stanley, an analyst at Wertheim & Co.

According to the trade association, consumption will reach 86.6 million tons in 1986 and could rise in 1987.

Cement is a fine gray powder made from limestone. It is mixed with crushed stone and water to make concrete and with sand and water to make mortar. The term portland cement is derived from a limestone quarried in Portland, England. A heavy, bulky commodity, cement may seem invulnerable to imports. But it has been imported, especially from Canada and Mexico, for years.

Analysts say there is a worldwide oversupply and rock-bottom shipping rates. Accordingly, such nations as Spain, Colombia and Greece have become big suppliers of cement to the U.S.

Last year, imports here reached 14 million tons, surpassing the 1979 record by 50 percent and accounting for 16 percent of domestic use, the cement association said.

The import figures include cement and clinker, pellets produced at a stage of cement-making. Imported clinker is ground down in domestic mills to make the powder that is cement.

The domestic industry is responsible for some of the imports. Muratore of Lone Star, based in Greenwich, Conn., said his company had closed plants temporarily in the United States--one in Houston is shut now--and used imports to save money.

``Imports have always been a way of life in the industry,`` he said, adding, however, that in the past ``U.S. producers brought cement in during times when they were unable to satisfy the market from their own production facilities.``

But some foreign suppliers are selling cement in the U.S. at ``dumping prices,`` he said, adding that dumping and injury from dumping were difficult to prove. Dumping means that a product is being sold in another country at less than the cost of production.

``We are not concerned with imports as much as we are with the effect they are having on selling prices,`` Muratore said. ``A lot of cement is coming in at dumped prices.``

Richard C. Creighton, president of the American Cement Trade Alliance in Washington, said the industry was developing information to determine whether to file dumping complaints against eight countries. Besides Colombia, Greece and Spain, the countries are Venezuela, Mexico, Japan, Korea and Taiwan.

The industry is concerned only with fairness not with across-the-board quotas or tariffs, Creighton said. ``We are not trying to keep cement out, but when it comes in, it must be sold at a fair market value.``

Last year, the industry was bolstered by record construction expenditures, analysts said, citing a strong nonresidential market and a fairly healthy residential market. The high levels of spending are expected to continue this year.

Some long-neglected work on the nation`s infrastructure has been getting done, analysts said. Construction of highways, public buildings, sewer facilities and the like increased in 1984 and again in 1985, the association said.

Four years ago, however, the bottom fell out of the cement market during the recession. There was consolidation and an increase in foreign ownership. Many balance sheets remain weak.

``The financial health of the industry is without question worse today than it was five years ago,`` Stanley of Wertheim said.